Tags: Analysis: Raul Castro’s Economic Revolution

Analysis: Raul Castro’s Economic Revolution

Monday, 11 Jul 2011 08:19 AM


Havana has announced plans to allow citizens to buy and sell property and cars, as part of Raul Castro’s sluggish attempt to dislodge the country from its decades-old economic quagmire.

The official Cuban government newspaper, Granma, has published details of a soon to be passed law that will lift strict restrictions on buying and selling real property and automobiles. By the end of the year, Cubans will be allowed to sell their homes without government interference for the first time since Fidel Castro took power in 1959. Citizens currently can swap homes if they receive government permission for the trade, but are not allowed to buy or sell property for money. They will also be allowed to buy and sell cars. Currently, Cubans can only sell cars made before 1959, and require government approval to purchase a new car. The proposed laws must now pass the Cuban Congress.

Analysis

These moves by Raul Castro are only gestures, do not indicate that he fully understands the failure of the Castro economic program, and likely will have limited immediate impact on the population. The changes in private ownership are geared toward easing the critical housing shortage, but without new buildings, shortages will remain. Moreover, most Cubans lack the financial resources to purchase property even if it was available.

Allowing private ownership is the most recent economic initiative by the Raul Castro government over the last year. Other reforms include permitting self-employment and revitalizing agriculture. Last year, he lifted restrictions for building on private land. Since the changes, there are now 200,000 individuals who are self employed, mostly in the restaurant sector, according to CNN. The government leased approximately 1 million hectares of fallow land to farmers, who are now self-employed and helping to decrease the severe food shortage on the island.

Analysis

The painfully slow reform process suggests a willingness of the current regime to implement change, but also demonstrates the strength of the shadow of Fidel Castro. The entire economic system requires revamping and revitalization, which the current government does not appear prepared to implement as long as Fidel is alive. Although the small changes bring hope for additional gains, they could crumble without continued improvements. Lack of supplies, for example, could destroy the experiment. Self employed restaurateurs require raw materials and food, both of which are in short supply on the island. Farmers require fertilizer, seeds, and other items which also are scarce. Increased demand for raw materials has fueled the already-raging black market and increased corruption, which will continue to grow until the government opens the country to foreign suppliers.

Lisa M. Ruth is a former CIA analyst and officer. She is currently Managing Partner of C2 Research, a boutique research and analysis firm in West Palm Beach, Florida and is Vice President at CTC International Group, Inc., a private intelligence firm.

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Analysis: Raul Castro’s Economic Revolution
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Monday, 11 Jul 2011 08:19 AM
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